Ghana's VAT Rate Reduced to 20% as New Tax Reforms Take Effect in 2026

The Ghana Revenue Authority (GRA) has announced significant changes to the Value Added Tax (VAT) system, reducing the VAT rate from 21% to 20%, effective January 1, 2026. This reform is part of the Value Added Tax Act, 2025 (Act 1151), which aims to enhance tax compliance and administrative efficiency. The new legislation abolishes the COVID-19 Health Recovery Levy and the VAT Flat Rate Scheme, transitioning to a more transparent VAT structure.

Additionally, the VAT registration threshold will increase from GH₵200,000 to GH₵750,000, allowing more businesses to benefit from the simplified tax regime. The reforms also introduce provisions for input tax credits related to the National Health Insurance Levy and the Ghana Education Trust Fund levies. Commissioner General Anthony Kwasi Sarpong emphasized the importance of collaboration between businesses and tax authorities to support compliance and development, highlighting the introduction of digital channels like E-VAT for accurate tax collection. These changes are aligned with recommendations from the International Monetary Fund (IMF) to improve revenue mobilization in Ghana.